URS - URS Corp

[Compounder]

Has anyone looked at this one? It seems to be trading at quite an undemanding fcf multiple, has an accelerated buyback programme and has recently reached a settlement with Jana Partners re strategic alternatives and CEO replacement.

 

Link to the co-operation agreement with Jana Partners http://www.sec.gov/Archives/edgar/data/102379/000010237914000020/ex99-1.htm

[eclecticvalue]

I was planning on writing up a thesis and create a thread. But I am looking at it.

[Compounder]

While the stock price hasn't moved much since my initial post things are certainly getting better. For a start over the last quarter the company repurchased 5.7 million shares for $266 million, and expects to have less than 70 million shares outstanding by year end, while throwing off cash flow of $725 million to $775 million. This implies cash flow of ~$10 per share, on a current stock price of $43. There might be some bonus upside as a result of the work on the newly constituted value creation committee of the board which includes nominees of Jana Partners.

 

 

[magno111]

While the stock price hasn't moved much since my initial post things are certainly getting better. For a start over the last quarter the company repurchased 5.7 million shares for $266 million, and expects to have less than 70 million shares outstanding by year end, while throwing off cash flow of $725 million to $775 million. This implies cash flow of ~$10 per share, on a current stock price of $43. There might be some bonus upside as a result of the work on the newly constituted value creation committee of the board which includes nominees of Jana Partners.

 

actually i think the FCF is around 400-450M so it is trading at 16% fcf yield... once the situtation is resolved, the company could have a decent upside

[PatientCheetah]

I am being lazy here. Do you know what are this company's issues? Revenues have stalled at this level for the past few years, any idea why?

[Compounder]

I am being lazy here. Do you know what are this company's issues? Revenues have stalled at this level for the past few years, any idea why?

 

A Chairman and CEO who has been in place for decades and grew the topline by making acquisitions but I don't think cared about TSR much. Part of the agreement with Jana is that he is being replaced by the end of the year at the latest. Again Jana nominees on the board are part of the new CEO selection committee. Also the compensation plan now includes FCF and TSR as metrics.

[radioheadok3]

You can't look at the past few years and assume that is steady state. Huge revenue and margin from de-weaponizing some chemical weapons for the DoD. You have to normalize the numbers for that contract and assume a steady-state run rate. I think cash flows are closer to $400mm or so, but I still need to do some work. Certainly headline risk from government revenue and it will take some time for the numbers to look less horrible on a YoY basis.

[Compounder]

Stock up quite a bit over the few days; seems to be reacting to the amended "change of control" provisions for the management team members. The amendments seem to ensure that a merger would be considered a change of control too?

 

http://investors.urs.com/phoenix.zhtml?c=89381&p=irol-sec#9545543

[Spekulatius]

A lot of hedge funds  are in URS. What makes one think that  FCF>net earnings are sustainable. This is a construction company, which can have huge CF variances from year to year, depending on how they are paid for large project. FCF have to be smoothed out over many years to get the annualized FCF and my bet is that they work out close to net earnings (or a little bit less due to growth Capex). The valuation is a yawn at this prices, imo.

[eclecticvalue]

Here is an update! http://www.reuters.com/article/2014/07/13/us-urs-aecom-tech-idUSKBN0FI0UA20140713

 

As usual there are law firms looking to investigate.